The emergence of broadband internet and consequences for economic and social development

This study was prepared by Nina Czernich while she was working with the Ifo Institute for Economic Research.It was completed in December 2010 and accepted as a doctoral thesis by the Department of Economics at the University of Munich. The study addresses the question whether the emergence of broadband internet influences economic and social development. The results indicate that broadband internet indeed positively affects a number of economically and socially meaningful variables. To address concerns a reverse causality and omitted variables and to identify causal effects of broadband internet, different instrumental-variable models are employed. All instrumental-variable models have in common that they rest on features of the pre-existing communication networks, since modern broadband networks are built along these pre-existing networks.